Disadvantages Of Buying A Franchise

A franchise is a legal agreement between franchisers and franchisees that consents use of the franchise’s trademark and trade name or marketing plan

Franchising is a business model that allows companies to rapidly expand their market share. According to Franchise.com (2015), there are three types of franchises: distributorships, trademark licensing, and business format franchises. When two organizations enter into a distributorship, the originating company provides the rights another company to sell their products. An example of a distributorship is when an auto manufacturing company grants rights to a dealership to sell their vehicles (Franchise.com, 2015). Trademark licensing is when one company allows another company to use their trademark (Franchise.com, 2015). The business format franchise authorizes franchisees to sell the parent company’s products and/or services as well as utilize their business model. This type of franchising is the most common and is the type needed to obtain to open a new Cold Stone Creamery.

Franchising is simply a method for expanding a business and distributing goods and distributing goods and services through a licensing relationship. In franchising, franchisors not only specify the products and services that will be offered by the franchisees, but also provide them with an operating system, brand and support. (Franchise.org, 2016)

Franchising is defined as “a commercial agreement between a party that owns a trade name or trademark (the franchisor) and party that sells or distributes goods or services using that trade name or trademark (the franchisee) (Kubasek et al., 2015, p. 431). There are key advantages for choosing a franchise when starting a new business. First, there is many times instant brand awareness that is identifiable by potential customers, which you as a new owner do not have to concentrate on building. Secondly, on-going marketing of your business is backed by the power of the established brand, and could be as simple as contributing a fee to a advertising fund that is driven by the franchisor. Thirdly, the Return on Investment (ROI) will most likely be faster as the customers are “ready-made” and eager to buy your product or service. Fourthly, the franchise model provides a built-in support model, both from the franchisor and from other franchisees throughout the region and nation. Lastly, the franchise will provide consistent and extensive training in every aspect of the business (Goldberg, 2015).

To the untrained eye, franchise and business opportunity investments look pretty much the same. Both invite you to purchase a package of goods and services and business concepts. Both offer you the chance to capitalize on a business idea that has already proved to be successful. Both provide some training, handholding and access to a valuable marketplace.

There is legal framework in franchising and the there my rise a legal difference in different countries thereby bring some operational challenges in some geographical locations. Franchise agreements will therefore dictate how the franchisor and franchisee run the business in a foreign nation thereby limiting creativity in the

The word "franchising" comes from the old French term defining the right for freedom of conducting any activity, for example, carrying out fairs, the organization of markets, operation of ferries and crossings, the right for hunting, a construction of roads or production of ale. In the Middle Ages kings had such privileges providing franchises on commercial activity of any type possessed.

Francize is the contract established between a franchisor and a franchisee. Franchisor is a contract that gives franchisee the right to use his or her trademark, trade name, or the right to lease or sell the product, and receives the appropriate commission accordingly. These contracts are a way to rapidly expand business with minimal capital. A legal right that government authorities have granted to companies and individuals to perform certain economic functions. For example, in a limited area, a company has the right to supply joint services. The franchise is emerging as one of the important business in this modern society and has spread quickly in many countries. The franchise is also spreading rapidly in the Vietnamese industrial society. Pizza2go is one of the examples of franchises in the Vietnam. Pizza2go has over 50 retail stores and has huge number of pizza menu with more than 2,000 options.

Franchising is a type of business in which a business grants the other business the right to use the brand name, business systems and processes in order to produce goods and services according to certain specifications. The party which gives out the rights to the other party to use their name is called the franchisor and the party purchasing the rights of the other business to use their name is known as the franchisee. Franchising is a type of a license given by the franchisor to the franchisee in order to allow the franchisee to sell goods and services under the name of the franchisor; the franchisee pays a certain amount of fees to the franchisor to buy their license. Franchising is one of the most popular methods in the world today to do

& Wang, Y. (2012) narrated that franchising is quite similar with licensing but comprises long-term commitments whereas licensing comprises short-term commitments. Franchising is a right that a parent company gives to other business by allowing to do specific company activities such as selling product or service with the name of parent company, for example McDonalds and Starbucks Coffee. A company selling franchise receives royalty payment related to franchisee's revenue. Parent company avoids many costs and risks of opening in a host country. A company using franchise entry mode can build great market place all over the world within short time at relative low risk and

In a franchise, the Franchisor sells the rights to sell its proprietary good/service to third parties or Franchisees. Both of the parties then sign a franchise agreement, which lasts for any agreed period, but generally between, 5 and 30 years. Once the franchise commences to function the Franchisee pays a royalty payment has to the franchisor on a monthly, quarterly or annually basis. The franchisor does not have liability and is not responsible for any activity in the franchisees business and does not have any employment liability, and are not responsible for any of the on job injuries in the franchisees business.

Manufacturing and Wholesale - In this type of franchise a franchiser grants a manufacturer the right to produce and sell goods using its name. This type of franchise is common among food and beverages companies. For example, soft drink bottles obtain franchise rights from soft drink companies to produce, bottle and distribute soft drinks.

Franchising as it is generally known today is a form of marketing or distribution in which a parent company customarily grants an individual or a relatively small company the right, or privilege, to do business in a described manner over a certain period of time in a specified place. The parent company is termed the franchisor; the receiver of the privilege is called the franchisee;

Franchising is a common term in daily life, business discourse, and the law. Nevertheless, the term is used in different contexts and with different meanings. Coughlan, Anderson, Stern, and El-Ansary employ the European Union’s description of franchising as a “…package of industrial or intellectual property rights.” The EU identifies three features of franchising—a common name or sign, with a uniform presentation of the premises, communication of know-how from franchisor to franchisee, and continuing provision of commercial or technical services by the franchisor to the franchisee.

“A continuing relationship in which a franchisor provides a licensed privilege to the franchisee to do business and offers assistance in organizing, training, merchandising, marketing and managing in return for a monetary consideration. Franchising is a form of business by which the owner (franchisor) of a product, service or method obtains distribution through affiliated dealers” (entrepreneur, 2015)